Rally in midcap banks a trading activity; no real interest from long-term investors: Valentis Advisors

It is okay to forgo short-term performance for a longer term safety and better performance, says says Daljeet Singh Kohli, Fund Manager.

The largecap banks have stabilised. When do you think midcap banks will stabilise because some of the midcap stocks or banks still have a long long way before they reach their peaks. AU finance went to Rs 1,300, came down to Rs 300 but it is still a distance away from where it was early this year. RBL was at Rs 500 last year, Bandhan Bank was at Rs 700 last year. Do you think some of these stocks will never see these levels in a long long time?
Yes, I think I tend to agree with that assessment that the times for such high valuations in terms of price to book for most of these banks or NBFCs will probably not be there in the near future. Right now the last one month or so, some of these beaten down stocks have been showing good returns but if you see the delivery volumes, you will know that it is more of a trading activity and less of any real interest from investors for long-term investment.


What we feel is that probably after September numbers, once this moratorium thing ends and we actually come to know what is the situation in the book, then only we can decide on things. So right now whatever is happening is just the end of liquidity chasing in and traders trying to make money out of it, which is good and it is okay. But for investment, we will have to wait for some more time. We have not added any of these things in our portfolio in the last three months. In fact, in the short term, we are underperformers. But then it is okay to forgo short-term performance for a longer term safety and better performance.